SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report under section 13 or 15(d) of
the Securities Exchange Act of 1934
for the fiscal year ended August 29, 1998
or
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________ to _________.
Commission file number 1-10714
AUTOZONE, INC.
(Exact name of registrant as specified in its charter)
Nevada 62-1482048
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
123 South Front Street, Memphis, Tennessee 38103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (901) 495-6500
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock New York Stock Exchange
($.01 par value)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (<section> 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form
10-K. [ ]
The aggregate market value of the 126,263,042 shares of voting stock of
the registrant held by non-affiliates of the registrant (excluding, for
this purpose, shares held by officers, directors, or 10% stockholders)
was $3,432,776,454 based on the last sales price of the Common Stock on
October 20, 1998 as reported on the New York Stock Exchange. The number
of shares of Common Stock outstanding as of October 20, 1998, was
150,361,561.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the year ended August
29, 1998, are incorporated by reference into Parts I and II.
Portions of the definitive Proxy Statement dated October 30, 1998, for
the Annual Meeting of Stockholders to be held December 17, 1998, are
incorporated by reference into Part III.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report on Form 10-K are
forward-looking statements. These statements discuss, among other
things, expected growth, domestic and international development and
expansion strategy, business strategies, and future performance. The
forward-looking statements are subject to risks, uncertainties and
assumptions including, without limitation, competition, product demand,
domestic and international economy, government approvals, inflation, the
ability to hire and retain qualified employees, the ability to convert
acquired stores in a profitable and timely manner, consumer debt levels
and the weather. Actual results may materially differ from anticipated
results. Please refer to the Risk Factors section of this Form 10-K for
more details.
<PAGE>
PART I
ITEM 1. BUSINESS
INTRODUCTION
We are the nation's leading specialty retailer of automotive parts
and accessories, primarily focusing on do-it-yourself customers. We
began operations in 1979 and at August 29, 1998, operated 2,657 auto
parts stores in 38 states, under the "AutoZone" and "Chief" store names.
Each auto parts store carries an extensive product line for cars, vans
and light trucks, including new and re-manufactured automotive hard
parts, maintenance items, and accessories. At August 29, 1998, 1,385 of
our AutoZone stores also had a commercial sales program, which provides
commercial credit and prompt delivery of parts and other products to
local repair garages, dealers and service stations. We do not sell tires
nor do we perform automotive repairs or installations. We anticipate
converting all of the Chief stores to the AutoZone store name and
format.
In addition, we sell heavy-duty truck parts and accessories through
43 TruckPro stores and automotive diagnostic and repair information
software through our ALLDATA subsidiary.
At August 29, 1998, our auto parts stores were in the following
locations:
Alabama 79 Louisiana 73 Rhode Island 12
Arizona 70 Maryland 9 South Carolina 50
Arkansas 46 Massachusetts 52 Tennessee 110
California 436 Michigan 63 Texas 382
Colorado 37 Mississippi 62 Utah 20
Connecticut 20 Missouri 80 Vermont 1
Delaware 3 Nevada 34 Virginia 41
Florida 116 New Hampshire 10 Washington, DC 1
Georgia 100 New Mexico 24 West Virginia 14
Illinois 81 New York 42 Wisconsin 15
Indiana 93 North Carolina 92 Wyoming 3
Iowa 13 Ohio 174 ----
Kansas 43 Oklahoma 62
Kentucky 53 Pennsylvania 41 TOTAL 2,657
=====
RECENT DEVELOPMENTS
On October 21, 1998, we acquired the real estate associated with 100
Express auto parts stores from Pep Boys-Manny, Moe & Jack for
approximately $108 million. We intend to convert these store locations to
the AutoZone store name and format.
On November 4, 1998, we issued $150 million of 6% Notes due November
2003. The proceeds of the Notes will be used for general corporate
purposes and, pending such application, were used to pay down borrowings
under our bank credit facilities.
MARKETING AND MERCHANDISING STRATEGY
We are dedicated to providing customers with superior service,
value, and quality parts selection at conveniently located, well-designed
stores. Key elements of this strategy are:
CUSTOMER SERVICE
We believe that do-it-yourself auto parts customers value customer
service; therefore, customer service is the most important element in our
marketing and merchandising strategy. We emphasize that our AutoZoners
should always put customers first. To do so, we employ parts personnel
with technical expertise to advise customers regarding the correct part
type and application, utilize a wide range of training methods to educate
and motivate our AutoZoners, and provide store personnel with significant
opportunities for promotion and incentive compensation. Our electronic
parts catalogs assist in the selection of parts; we offer free testing of
starters, alternators, batteries, sensors and actuators; and we were
among the first auto parts companies to offer lifetime warranties on many
of the parts we sell. Our satellite system helps us to speed up credit
card and check approval processes and locate parts at neighboring
AutoZone stores. Our auto parts stores generally open at 8 a.m. and close
between 8 and 10 p.m. (with some open to midnight) Monday through
Saturday and typically open at 9 a.m. and close between 6 and 7 p.m. on
Sunday.
ALLDATA has developed a database system that provides comprehensive
and up-to-date automotive diagnostic, service and repair information,
which it markets to professional repair shops. ALLDATA also sells
computer software on CD-ROM for individual cars for use by do-it-
yourselfers.
PRODUCTS
This table shows the types of products we sell in our auto parts
stores:
<TABLE>
<CAPTION>
HARD PARTS MAINTENANCE ITEMS ACCESSORIES MISCELLANY
- ---------- ----------------- ----------- ----------
<S> <C> <C> <C>
Alternators Antifreeze Floor Mats Air Fresheners
Batteries Brake Fluid Lights Dent Filler
Brake Drums, Rotors Oil Mirrors Hand Cleaner
Shoes & Pads Oil and Fuel Additives Stereos Paint
Carburetors Oil, Air, and Fuel Filters Repair Manuals
Clutches Power Steering Fluid Tools
Engines Transmission Fluid
Mufflers Wash and Wax Chemicals
Shock Absorbers Windshield Wipers
Spark Plugs
Starters
Struts
Water Pumps
</TABLE>
Our auto parts stores generally offer between 16,000 and 21,000
stock keeping units ("SKUs") covering a broad range of vehicle types.
Each auto parts store carries the same basic product line with some
regional differences based on climate, demographics and age and type of
vehicle registration. Our "flexogram" program enables us to tailor our
hard parts inventory to the makes and models of the automobiles in each
store's trade area. The AutoZone stores sell a number of products,
including batteries, engines, starters, alternators, water pumps, brake
parts, and filters, under its private label names. We also offer a range
of products, consisting principally of hard parts, through our express
parts program, which provides overnight delivery of lower turnover
products to our AutoZone stores.
PRICING
We employ an everyday low price strategy and attempt to be the price
leader in hard parts categories. We believe that our prices overall
compare favorably to those of our competitors.
COMMERCIAL SALES PROGRAM
Our commercial sales program in the auto parts stores provides
credit and prompt delivery of parts and other products to local repair
garages, dealers and service stations. At August 29, 1998, this program
was offered in 1,385 AutoZone stores. Commercial customers generally pay
the same everyday low prices as paid by do-it-yourself customers.
STORE DESIGN AND VISUAL MERCHANDISING
We design and build stores for a high visual impact. AutoZone stores
have an industrial "high tech" appearance by utilizing colorful exterior
signage, exposed beams and ductwork, and brightly lighted interiors.
Maintenance products, accessories, and miscellaneous items are
attractively displayed for easy browsing by customers, with specialized
gravity-feed racks for batteries and, in many stores, oil. We employ a
uniform ("planogrammed") store layout system to promote consistent
merchandise presentation in all of our auto parts stores. In-store
signage and special displays aid customers in locating merchandise and
promoting products.
STORE DEVELOPMENT AND EXPANSION STRATEGY
This table shows the auto parts store development during the past five
fiscal years:
Fiscal Year
----------------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Beginning Stores 783 933 1,143 1,423 1,728
New Stores (1) 151 210 280 308 952
Replaced Stores (2) 20 29 31 17 12
Closed Stores (2) (21) (29) (31) (20) (35)
---- ----- ----- ----- -----
Ending Stores 933 1,143 1,423 1,728 2,657
==== ===== ===== ===== =====
(1) Includes stores obtained through Chief and Auto Palace acquisitions
in 1998.
(2) Replaced stores are either relocations or conversions of existing
stores. Closed stores include replaced stores.
In 1998, we acquired ADAP, Inc., which was doing business as "Auto
Palace," and Chief Auto Parts Inc. We made the acquisitions to give us
locations and employees where we did not have many stores before.
We believe that expansion opportunities exist both in markets in
which we do not currently serve, and in markets where we can achieve a
larger presence, for both AutoZone and TruckPro stores. We attempt to
obtain high visibility sites in high traffic locations and undertake
substantial research prior to entering new markets. Key factors in
selecting new site and market locations include population, demographics,
vehicle profile, and number and strength of competitors' stores. We
generally seek to open new stores within or contiguous to existing market
areas and attempt to cluster development in new urban markets in a
relatively short period of time in order to achieve economies of scale in
advertising and distribution costs. In addition to continuing to
construct our own stores, we regularly evaluate potential acquisition
candidates in new as well as in existing markets.
Our net sales have grown significantly in recent years, increasing
from $1.5 billion in fiscal 1994 to $3.2 billion in fiscal 1998.
Continued growth and financial performance will be dependent, in large
part, upon our ability to open new stores on a profitable basis in
existing and new markets and also upon our ability to continue to
increase sales in existing stores. We make no assurance that we can
continue to open and operate new stores on a timely and profitable basis,
successfully integrate stores that we acquire from third parties or
continue to attain increases in comparable store sales.
STORE OPERATIONS
STORE FORMATS
As of August 29, 1998, we had auto parts stores in the following
square footage ranges:
SQUARE FOOTAGE NUMBER OF STORES
-------------- ----------------
Less than 4,000 280
4,000 to 7,000 1,608
More than 7,000 769
Substantially all AutoZone stores are based on standard store
formats resulting in generally consistent appearance, merchandising and
product mix. Approximately 85% to 90% of each store's square footage is
selling space, of which approximately 30% to 40% is dedicated to hard
parts inventory. The hard parts inventory area is fronted by a counter
which generally runs the depth or length of the store, dividing the hard
parts area from the remainder of the store. The remaining selling space
contains displays of accessories and maintenance items.
At the hard parts counter, we have knowledgeable parts personnel
available to assist customers with their parts needs utilizing our
proprietary electronic parts catalog with a video screen which is visible
to both the AutoZoner (employee) and the customer. The parts catalog will
suggest additional items that a customer should purchase in order to
properly install the part being purchased.
All of the auto parts stores of less than 4,000 square feet in size
are stores acquired from Chief Auto Parts. We have developed a format for
some of these stores which we believe will make them productive in the
AutoZone store system. In addition, some of these stores will be closed,
expanded or relocated.
Approximately 1,900 of our auto parts stores are freestanding, with
the balance principally located within strip shopping centers.
Freestanding large format stores typically have parking for approximately
45 to 50 cars on a lot of approximately 3/4 to one acre. Smaller
AutoZone stores typically have parking for approximately 25 to 40 cars
and are usually located on a lot of approximately 1/2 to 3/4 acre.
STORE PERSONNEL AND TRAINING
Each AutoZone store typically employs from 9 to 20 AutoZoners,
including a manager and an assistant manager. AutoZoners typically have
prior automotive experience. Although we rely primarily on on-the-job
training, we also provide formal training programs, which include regular
store meetings on specific sales and product issues, standardized
training manuals and a specialist program where AutoZoners can obtain
certification in several areas of technical expertise from both the
company and from independent certification agencies. Training is
supplemented with frequent store visits by management.
Store managers get financial incentives through performance-based
bonuses and grants of stock options. In addition, our growth has provided
opportunities for the promotion of qualified AutoZoners. We believe
these opportunities are important to attract, motivate and retain quality
personnel.
Our stores are primarily supervised through area advisors who
oversee approximately five to six stores each and who report to district
managers. District managers with approximately 45 to 60 stores each, in
turn, report to eight regional managers. Purchasing, merchandising,
advertising, accounting, cash management, store development, systems
technology and support and other store support functions are centralized
in our store support center in Memphis, Tennessee. We believe that this
centralization enhances consistent execution of our merchandising and
marketing strategy at the store level.
STORE AUTOMATION
All AutoZone stores have proprietary electronic parts catalogs that
provide parts information based on the make, model and year of an
automobile. The catalog display screens are placed on the hard parts
counter where both AutoZoners and customers can view the screen. In
addition, our satellite system enables the AutoZone stores to speed up
credit card and check approval processes and locate parts at neighboring
AutoZone stores.
All AutoZone stores utilize our computerized Store Management
System, which includes bar code scanning and point-of-sale data
collection terminals. The Store Management System provides
administrative assistance and improved personnel scheduling at the store
level, as well as enhanced merchandising information and improved
inventory control. We believe the Store Management System also enhances
customer service through faster processing of transactions and simplified
warranty and product return procedures.
PURCHASING AND DISTRIBUTION
Merchandise is selected and purchased for all AutoZone and TruckPro
stores at our store support center in Memphis. No one class of product
accounts for as much as 10% of our total sales. In fiscal 1998, we
purchased products from approximately 300 suppliers and no single
supplier accounted for more than 7% of our total purchases. During
fiscal year 1998, our ten largest suppliers accounted for approximately
33% of our purchases. We generally have few long-term contracts for the
purchase of merchandise. We believe that we have excellent relationships
with suppliers. We also believe that alternative sources of supply exist,
at similar cost, for substantially all types of product sold.
Substantially all of our merchandise is shipped by vendors to our
distribution centers. Orders are typically placed by stores on a weekly
basis with orders shipped from the warehouse in our trucks on the
following day.
COMPETITION
We compete principally in the do-it-yourself and, more recently, the
commercial automotive aftermarket. Although the number of competitors
and the level of competition experienced by our stores varies by market
area, the automotive aftermarket is fragmented and generally very
competitive. We principally compete using store location, customer
service, product selection, product warranty and price. While we believe
that we compete effectively across the United States, some of our
competitors have been operating longer in particular geographic areas and
may be more familiar with particular regional needs or may have a name
more recognizable in a particular region.
In addition to competing with other auto parts retailers, we compete
with jobber stores, which principally sell to wholesale accounts and
installers, but also have significant sales to do-it-yourself customers.
In addition, we also compete with mass merchants which sell automotive
maintenance products such as oil, filters, windshield wiper blades, wash
and wax chemicals, and batteries.
Recently, several large auto parts chains have merged or announced
plans to merge. We do not know what impact these mergers will have upon
competition in the retail automotive aftermarket.
TRADEMARKS AND PATENTS
We have registered several service marks and trademarks in the
United States Patent and Trademark office, including our service mark
"AutoZone" and trademarks "AutoZone," "Duralast," "Valucraft," "Ultra
Spark," "Deutsch," "Albany," "ALLDATA" and "TruckPro". We believe that
the "AutoZone" service mark and trademarks have become an important
component in our merchandising and marketing strategy.
In the 1998 fiscal year we were granted a patent by the Patent and
Trademark Office for a starter and alternator tester which is being used
exclusively in our AutoZone stores. This tester gives us greater testing
accuracy and improved customer service.
EMPLOYEES
As of August 29, 1998, we employed approximately 38,500 persons,
approximately 27,400 of whom were employed full-time. Approximately 90%
of our employees were employed in stores or in direct field supervision,
approximately 7% in distribution centers and approximately 3% in store
support functions.
We have never experienced any material labor disruption, and believe
that our labor relations are generally good.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists our executive officers. The title of each
executive officer includes the words "Customer Satisfaction" which
reflects our commitment to customer service as part of our marketing and
merchandising strategy. Officers are elected by and serve at the
discretion of the Board of Directors.
JOHNSTON C. ADAMS, JR., 50 -- CHAIRMAN, CHIEF EXECUTIVE OFFICER, AND
DIRECTOR
Johnston C. Adams, Jr., has been a director since 1996. Mr. Adams
was elected Chairman and Chief Executive Officer in March 1997, had been
President and Chief Executive Officer since December 1996, and had been
Vice Chairman and Chief Operating Officer since March 1996. Previously,
he was Executive Vice President-Distribution since 1995. From 1990 to
1994, Mr. Adams was a co-owner of Nicotiana Enterprises, Inc., a food
distribution company. From 1983 to 1990, Mr. Adams was President of the
Miami Division of Malone & Hyde., Inc. ("Malone & Hyde"), AutoZone's
former parent company.
TIMOTHY D. VARGO, 47 -- PRESIDENT, CHIEF OPERATING OFFICER, AND DIRECTOR
Timothy D. Vargo has been a director since 1996 and was elected
President and Chief Operating Officer in March 1997. Previously, Mr.
Vargo had been Vice Chairman and Chief Operating Officer since 1996,
Executive Vice President-Merchandising and Systems Technology since 1995
and had been Senior Vice President-Merchandising in 1995. Mr. Vargo was
Senior Vice President-Merchandising from 1986 to 1992 and was Director of
Stores for AutoZone from 1984 to 1986.
LAWRENCE E. EVANS, 54 -- EXECUTIVE VICE PRESIDENT - STORE DEVELOPMENT
AND ASSISTANT SECRETARY
Lawrence E. Evans has been Executive Vice President-Store
Development since 1995. Previously he was Senior Vice President-
Development from 1993 to 1995 and Vice President-Real Estate since 1992.
Mr. Evans was Director of Real Estate from 1991, and had been an attorney
for either Malone & Hyde or AutoZone since 1986. Mr. Evans was first
employed by Malone & Hyde from 1969 until 1976 and returned to Malone &
Hyde in 1986.
ROBERT J. HUNT, 49 -- EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
AND DIRECTOR
Robert J. Hunt was elected a director in September 1997 and has been
Executive Vice President and Chief Financial Officer since 1994. Prior
to that time, Mr. Hunt was Executive Vice President, Chief Financial
Officer, and a Director of The Price Company from 1991 to 1993.
Previously, Mr. Hunt had been employed by Malone & Hyde since 1984, where
he was Executive Vice President and Chief Financial Officer from 1988 to
1991.
GERALD E. COLLEY, 46 -- SENIOR VICE PRESIDENT-STORES
Gerald E. Colley was elected Senior Vice President-Stores in October
1997. He had been Vice President-Stores since April 1997, and had been a
Regional Manager since February 1997. Previously, Mr. Colley had been an
Executive Vice President for Tire Kingdom, Inc., in 1996, and had been
President of Rose Auto Stores Florida, Inc., in 1995. Prior to that time
Mr. Colley had been employed by AutoZone since 1987, and had been a Vice
President from 1988 to 1995.
HARRY L. GOLDSMITH, 47 -- SENIOR VICE PRESIDENT, SECRETARY, AND GENERAL
COUNSEL
Harry L. Goldsmith was elected Senior Vice President, Secretary and
General Counsel in 1996. Previously he was Vice President, General
Counsel and Secretary from 1993 to 1996.
MICHAEL E. LONGO, 37 -- SENIOR VICE PRESIDENT - DISTRIBUTION
Michael E. Longo has been Senior Vice President - Distribution since
March of 1998. Prior to that time, he had been Vice President -
Distribution since 1996, and a Director of Distribution since 1993. Mr.
Longo began working with AutoZone in 1992.
ANTHONY DEAN ROSE, JR., 38 -- SENIOR VICE PRESIDENT - ADVERTISING
Anthony Dean Rose, Jr. has been Senior Vice President-Advertising
since 1995. Prior to that time, he had been Vice President-Advertising
since 1989 and a Director of Advertising since 1987. Mr. Rose has been
employed by AutoZone or Malone & Hyde since 1982.
STEPHEN W. VALENTINE, 36 -- SENIOR VICE PRESIDENT - INTERNATIONAL
Stephen W. Valentine has been Senior Vice President-International
since October 1998, and had been Senior Vice President-Systems Technology
and Support since 1995. Prior to that time, he had been Vice President-
Systems Technology and Support since 1994, and a Director of Store
Management Systems since 1990. Mr. Valentine began working with AutoZone
in 1989.
DAVID J. WILHITE, 36 -- SENIOR VICE PRESIDENT - MERCHANDISING
David J. Wilhite was elected Senior Vice President-Merchandising in
September 1997. Previously Mr. Wilhite was a Vice President-
Merchandising since 1996. He has been an employee of AutoZone or Malone
& Hyde since 1984.
MICHAEL E. BUTTERICK, 47 -- VICE PRESIDENT - CONTROLLER
Michael E. Butterick has been Vice President-Controller since 1995.
Prior to that time, Mr. Butterick was Chief Financial Officer of United
Medical Incorporated from 1993 to 1995. From 1990 to 1993 Mr. Butterick
was Vice President-Finance of the Mid South General Merchandise Division,
a division of Fleming Companies. Previously, Mr. Butterick had been
employed by Malone & Hyde or AutoZone since 1983, where he was Controller
of AutoZone from 1986 to 1990.
ANDREW M. CLARKSON, 61 -- DIRECTOR AND CHAIRMAN OF THE FINANCE COMMITTEE
Andrew M. Clarkson has been a director since 1986 and is an employee
serving as Chairman of the Finance Committee. Mr. Clarkson had been Vice
President and Treasurer in 1986, Senior Vice President and Treasurer from
1986 to 1988, was Secretary from 1988 to 1993 and was Treasurer from 1990
to 1995. Previously, Mr. Clarkson was Chief Financial Officer of Malone
& Hyde from 1983 to 1988.
RISK FACTORS
GROWTH STRATEGY
We have significantly increased our store count in the past five
fiscal years, growing from 783 stores at August 28, 1993, to 2,657 stores
at August 29, 1998, an average store count increase per year of 28%. We
do not expect that we can continue our store count growth rate at the
historic pace. In addition, a portion of our total sales increases each
year results from increases in sales at existing stores. We cannot make
any assurance that we can continue to increase same store sales as our
stores mature in their markets.
INTEGRATION OF ACQUISITIONS
In addition to opening our own store locations, we acquired 672 auto
parts stores from Chief Auto Parts and Auto Palace in the 1998 fiscal
year. We have converted the Auto Palace stores to the AutoZone store name
and format, and intend to make a similar conversion for the Chief stores.
We can make no assurances as to our ability to convert the Chief stores
in a timely or profitable manner. In addition, other auto parts retailers
competing in California, Chief's principal market, and in New England,
Auto Palace's principal market, have been in those markets for a longer
period of time, have a trade name more recognizable than the name
AutoZone in those markets, and may have a better understanding of the
particular customer needs and expectations in these markets. In addition,
the Chief stores are substantially smaller than our traditionally sized
AutoZone auto parts stores and therefore, the Chief stores, even after
conversion, may not achieve the sales and profitability of a traditional
AutoZone store.
EMPLOYEES
We have an ever-increasing need for qualified employees. In fiscal
year 1998, our consolidated employee count increased from approximately
28,700 at the beginning of the year to about 38,500, a 34% increase in
the year. We can make no assurances that we can continue to hire and
retain qualified employees at current wage rates.
COMPETITION
Recently, several large auto parts chains have merged or announced
plans to merge. We do not know what impact these mergers will have upon
competition in the retail automotive aftermarket. If our merging
competitors are able to achieve efficiencies in their mergers, then there
may be greater competitive pressures in the markets in which they are
strongest.
DEMAND FOR PRODUCTS
Demand for products sold by our stores depends on many factors. In
the short term, it may depend upon:
* the weather, as vehicle maintenance may be deferred during
periods of inclement weather.
* the economy, as during periods of good economic conditions,
more of our do-it-yourself customers may pay others to repair and
maintain their cars instead of working on their own cars. This
factor is tempered by our commercial parts sales program which
sells parts to installers. In periods of declining economic
conditions, both do-it-yourself and do-it-for-me customers may
defer vehicle maintenance or repair.
For the long term, demand for our products may depend upon:
* the quality of the vehicles manufactured by the original
vehicle manufacturers, and the length of the warranty offered on
new vehicles.
* the law. Contrary to the terms of the federal Clean Air
Act, the U.S. Environmental Protection Agency has adopted
regulations that would limit access to computerized diagnostic
information (commonly referred to as "on-board diagnostics")
relating to vehicle emission systems on cars and light trucks
beginning with the 1996 model year. These regulations have been
challenged by several automotive aftermarket trade associations.
However, we cannot make any prediction as to the outcome of these
challenges. If these regulations are found to be proper and are
fully enacted, do-it-yourself customers and commercial installers
not associated with the original manufacturers will have little
or no access to on-board diagnostic information for vehicles,
which may limit their ability to diagnose, maintain, or repair
the emissions systems of vehicles.
INTERNATIONAL DEVELOPMENT
We intend to open auto parts stores in Mexico during the 1999 fiscal
year. Although we believe that there is great potential for auto parts
stores in the fragmented international auto parts market, we have no
experience opening or operating stores outside of the United States, and
no assurances can be made that we can open stores in any other country in
a timely or profitable manner.
VENDORS
Recently, several of our vendors have merged and others have
announced plans to merge. Further vendor consolidation could limit the
number of vendors from which we may purchase products and could
materially affect the prices we pay for these products.
ITEM 2. PROPERTIES
This table shows the square footage and number of leased and owned
properties for our auto parts stores:
NO. OF STORES SQUARE FOOTAGE
------------- --------------
Leased 1,282 7,115,287
Owned 1,375 9,384,212
----- ---------
Total 2,657 16,499,499
===== ==========
We have 3,479,192 square feet in our distribution centers, all of
which is owned, except for 815,992 square feet which is leased. The
distribution centers are located in Arizona, California, Georgia,
Illinois, Louisiana, Ohio, Tennessee, and Texas.
Our store support center, which we own, is located in Memphis,
Tennessee, and consists of 360,000 square feet.
We also own and lease other properties which are not material
in the aggregate.
ITEM 3. LEGAL PROCEEDINGS
AutoZone, Inc., and its wholly-owned subsidiary AutoZone Stores, Inc.,
were defendants in a purported class action entitled "Joe C. Proffitt,
Jr., on behalf of himself and all others similarly situated, vs.
AutoZone, Inc., and AutoZone Stores, Inc.," filed in the Circuit Court
for Jefferson County, Tennessee, on or about October 17, 1997. In the
complaint, which was similar to other class action complaints filed
against several other retailers of aftermarket automotive batteries, the
plaintiff alleges that we sold "old," "used," or "out of warranty"
automotive batteries to customers as if the batteries were new, and
purported to state causes of action for unfair or deceptive acts or
practices, breach of contract, breach of duty of good faith and fair
dealing, intentional misrepresentation, fraudulent concealment, civil
conspiracy, and unjust enrichment. The plaintiff was seeking an
accounting of all moneys wrongfully received, compensatory and punitive
damages, as well as plaintiff's costs. On May 21, 1998, on the
plaintiff's motion, the court dismissed the case without prejudice.
Chief Auto Parts Inc., a wholly-owned subsidiary of AutoZone, Inc.,
is a defendant in a class action entitled "Doug Winfrey, et al. on their
own behalf and on behalf of a class and all others similarly situated,
vs. Chief Auto Parts Inc. et al.," filed in the Superior Court of
California, County of San Joaquin on August 22, 1995, and then
transferred to the Superior Court of California, County of San Francisco
on October 26, 1995. The Superior Court denied the plaintiffs' motion
for class certification on December 7, 1996. On February 6, 1998, the
Court of Appeals reversed the Superior Court's order denying class
certification and remanded the case to the Superior Court for further
proceedings. On November 16, 1998, the Superior Court certified the
class.
The plaintiffs allege that Chief had a policy and practice of
denying hourly employees in California mandated rest periods during their
scheduled work hours. The plaintiffs are seeking damages, restitution,
disgorgement of profits, statutory penalties, declaratory relief,
injunctive relief, prejudgment interest, and reasonable attorney fees,
expenses and costs. We are unable to predict the outcome of this lawsuit
at this time, but believe that the potential damages recoverable by any
single plaintiff against Chief are minimal. However, if the plaintiff
class were to prevail on all of its claims, the aggregate amount of
damages could be substantial. We are vigorously defending against this
action.
We are also a party to various claims and lawsuits arising in the
ordinary course of business, which, in the opinion of management, are
not, singularly or in the aggregate, material to our results of
operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Common Stock Market Prices for our common stock as traded on the New
York Stock Exchange as shown on page 14 of the Annual Report to
Stockholders for the fiscal year ended August 29, 1998 are incorporated
herein by reference.
At October 20, 1998, we had 3,225 stockholders of record, excluding
the number of beneficial owners whose shares were represented by security
position listings.
On May 1, 1998, as a portion of the consideration for the
acquisition of the assets of TruckPro Limited Partnership, we transferred
to certain owners of TruckPro 30,000 shares of common stock, $0.01 par
value. The transaction was exempt from registration under Section 4(2)
of the Securities Act of 1933.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data contained in the Ten-Year Review on pages 12
and 13 of the Annual Report to Stockholders for the fiscal year ended
August 29, 1998, are incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Review on pages 15 through 17 of the Annual Report to
Stockholders for the fiscal year ended August 29, 1998, are incorporated
herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The section entitled "Financial Market Risk" on page 16 of the
Annual Report to Stockholders for the fiscal year ended August 29, 1998,
is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and related notes included on pages 18
through 27 and the quarterly summary on page 14 of the Annual Report to
Stockholders for the fiscal year ended August 29, 1998, are incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference
to Part I of this document and to the definitive Proxy Statement dated
October 30, 1998, filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 in connection with the annual meeting of
stockholders to be held December 17, 1998.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference
to the definitive Proxy Statement dated October 30, 1998, filed pursuant
to Regulation 14A under the Securities Exchange Act of 1934 in connection
with the annual meeting of stockholders to be held December 17, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the
definitive Proxy Statement dated October 30, 1998, filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934 in connection
with the annual meeting of stockholders to be held December 17, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference
to the definitive Proxy Statement dated October 30, 1998, filed pursuant
to Regulation 14A under the Securities Exchange Act of 1934 in connection
with the annual meeting of stockholders to be held December 17, 1998.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
The following financial statements included on pages 18 through
27 in the Annual Report to Stockholders for the fiscal year
ended August 29, 1998, are incorporated by reference in Item 8:
Report of Independent Auditors
Consolidated Statements of Income for the fiscal years ended
August 29, 1998, August 30, 1997, and August 31, 1996
Consolidated Balance Sheets as of August 29, 1998, and August
30, 1997
Consolidated Statements of Stockholders' Equity for the fiscal
years ended August 29, 1998, August 30, 1997, and August 31,
1996
Consolidated Statements of Cash Flows for the fiscal years
ended August 29, 1998, August 30, 1997, and August 31, 1996
Notes to Consolidated Financial Statements
2. Financial Statement Schedule II - Valuation and Qualifying
Accounts
All other schedules are omitted because the information is not
required or because the information required is included in the
financial statements or notes thereto.
3. The following exhibits are filed as a part of this report:
3.1 Articles of Incorporation of AutoZone, Inc. Incorporated
by reference to Exhibit 3.1 to the Form 10-K for the
fiscal year ended August 27, 1994.
3.2 Amendment to Articles of Incorporation of AutoZone, Inc.,
dated December 16, 1993, to increase its authorized shares
of common stock to 200,000,000. Incorporated by reference
to Exhibit 3.2 to the Form 10-K for the fiscal year ended
August 27, 1994.
3.3 Amended and Restated By-laws of AutoZone, Inc.
4.1 Form of Common Stock Certificate. Incorporated by
reference to Exhibit 4.1 to Pre-Effective Amendment No. 2
to the Registration Statement filed on Form S-1 under the
Securities Act of 1933 (No. 33-45649).
4.2 Registration Rights Agreement between AutoZone, Inc. and
J. Dale Dawson and Judith S. Dawson dated May 1, 1998.
Incorporated by reference to the Form 10-Q for the quarter
ended May 9, 1998.
4.3 Senior Indenture, dated as of July 22, 1998, between
AutoZone, Inc. and the First National Bank of Chicago.
Incorporated by reference to Exhibit 4.1 to the Form 8-K
dated July 17, 1998.
*10.1 Director Stock Option Plan. Incorporated by reference to
Exhibit 4.1 to the Form S-8 (No. 333-48981) dated March
31, 1998.
*10.2 1998 Director Compensation Plan. Incorporated by reference
to Exhibit 4.1 to the Form S-8 (No. 333-48979) dated March
31, 1998.
*10.3 Amended and Restated Stock Option Plan, as amended on
February 26, 1991. Incorporated by reference to Exhibit
10.4 to the Form S-1 (No. 33-39197) filed April 1, 1991.
*10.4 Amendment No. 1 dated December 18, 1992, to the Amended
and Restated Stock Option Plan. Incorporated by reference
to Exhibit 10.5 to the Form 10-K for the fiscal year ended
August 28, 1993.
*10.5 Amended and Restated 1996 Stock Option Plan. Incorporated
by reference to Exhibit 10.2 to the Form 10-Q for the
quarter ended November 22, 1997.
*10.6 Employment and Non-Compete Agreement between John C.
Adams, Jr., and AutoZone, Inc., dated June 11, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.7 Employment and Non-Compete Agreement between Timothy D.
Vargo, and AutoZone, Inc., dated June 11, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.8 Employment and Non-Compete Agreement between Robert J.
Hunt, and AutoZone, Inc., dated June 11, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.9 Employment and Non-Compete Agreement between Stephen W.
Valentine, and AutoZone, Inc., dated July 7, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.10 Employment and Non-Compete Agreement between Harry L.
Goldsmith, and AutoZone, Inc., dated June 11, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.11 Executive Incentive Compensation Plan. Incorporated by
reference to Exhibit A to the definitive Proxy Statement
dated November 14, 1994.
10.12 Amended and Restated Agreement between J.R. Hyde, III,
and AutoZone, Inc., dated October 23, 1997. Incorporated
by reference to Exhibit 10.1 to the Form 10-Q for the
quarter ended November 22, 1997.
10.13 Credit Agreement dated as of February 23, 1998 among
AutoZone, Inc., the several lenders from time to time
party thereto, and NationsBank, N.A. as Agent and SunTrust
Bank, Nashville, N.A. as Documentation Agent. Incorporated
by reference to Exhibit 10.1 the Form 10-Q for the quarter
ended May 9, 1998.
10.14 Credit Agreement among AutoZone, Inc., as Borrower, the
several lenders from time to time party thereto,
NationsBank, N.A., as Agent, and SunTrust Bank, Nashville,
N.A. as Co-Agent, dated December 20, 1996. Incorporated by
reference to the Form 10-Q for the quarter ended February
15, 1997.
10.15 Amendment No. 1 to Credit Agreement among AutoZone, Inc.,
as Borrower, the several lenders from time to time party
thereto, NationsBank, N.A., as Agent, and SunTrust Bank,
Nashville, N.A. as Co-Agent, dated December 20, 1996.
Incorporated by reference to Exhibit 10.2 to the Form 10-Q
for the quarter ended February 14, 1998.
13.1 Annual Report to Stockholders for the fiscal year ended
August 29, 1998. Incorporated by reference to the Annual
Report filed with the Securities and Exchange Commission
via EDGAR pursuant to Rule 101(b)(1) of Regulation S-T.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP.
__________________
*Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
The Registrant filed the following reports on Form 8-K during the
fiscal quarter ended August 29, 1998:
1. May 11, 1998: The Registrant reported that it had executed a
definitive agreement to acquire the outstanding common stock of
Chief Auto Parts Inc.
2. July 29, 1998: The Registrant reported that it had closed the
acquisition of Chief Auto Parts Inc., and filed the purchase
agreement as an exhibit.
3. July 17, 1998: The Registrant filed exhibits on Form 8-K related
to its offering of 6 1/2 % Debentures due 2008, registered under the
Securities Act of 1933 on Form S-3 (No. 333-58565).
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AUTOZONE, INC.
By: /S/ J.C. ADAMS, JR. November 25, 1998
---------------------------------
J.C. Adams, Jr.
Chairman, Chief Executive Officer
and Director
(Principal Executive Officer)
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ J.C. ADAMS, JR. Chairman, Chief Executive November 25, 1998
- ---------------------------- Officer and Director
J.C. Adams, Jr. (Principal Executive Officer)
/s/ TIMOTHY D. VARGO President, Chief Operating November 25, 1998
- ---------------------------- Officer, and Director
Timothy D. Vargo
/s/ ROBERT J. HUNT Executive Vice President, Chief November 25, 1998
- ---------------------------- Financial Officer and Director
Robert J. Hunt (Principal Financial Officer)
/s/ MICHAEL E. BUTTERICK Vice President and Controller November 25, 1998
- ----------------------------
Michael E. Butterick (Principal Accounting Officer)
/s/ ANDREW M. CLARKSON Director November 25, 1998
- ----------------------------
Andrew M. Clarkson
- ---------------------------- Director
N. Gerry House
/s/ J.R. HYDE, III Director November 25, 1998
- ----------------------------
J.R. Hyde, III
/s/ JAMES F. KEEGAN Director November 25, 1998
- ----------------------------
James F. Keegan
/s/ MICHAEL W. MICHELSON Director November 25, 1998
- ----------------------------
Michael W. Michelson
/s/ RONALD A. TERRY Director November 25, 1998
- ----------------------------
Ronald A. Terry
/s/ GEORGE R. ROBERTS Director November 25, 1998
- ----------------------------
George R. Roberts
</TABLE>
<PAGE>
SCHEDULE II
AUTOZONE, INC.
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
<TABLE>
<CAPTION>
COL A COL B COL C COL D COL E
ADDITIONS
-------------------------------------
Balance (1) (2)
Beginning of Charged to Costs Charged to Other Deductions- Balance at
CLASSIFICATION Period and Expenses Accounts-Describe Describe End of Period
-------------- ------------ ---------------- ----------------- ------------ -------------
<S> <C> <C> <C> <C>
Year Ended August 31, 1996:
Reserve for warranty claims $12,613 $26,982 $25,443 (1) $14,152
Other reserves 9,229 9,015
Year Ended August 30, 1997:
Reserve for warranty claims $14,152 $40,303 $35,333 (1) $19,122
Other reserves 9,015 11,227
Year Ended August 29, 1998:
Reserve for warranty claims $19,122 $58,511 $56,847 (1) $20,786
Other reserves 11,227 14,296
<FN>
(1) Cost of product for warranty replacements, net of salvage and amounts collected from customers.
</TABLE>
<PAGE>
EXHIBIT INDEX
3.1 Articles of Incorporation of AutoZone, Inc. Incorporated
by reference to Exhibit 3.1 to the Form 10-K for the
fiscal year ended August 27, 1994.
3.2 Amendment to Articles of Incorporation of AutoZone, Inc.,
dated December 16, 1993, to increase its authorized shares
of common stock to 200,000,000. Incorporated by reference
to Exhibit 3.2 to the Form 10-K for the fiscal year ended
August 27, 1994.
3.3 Amended and Restated By-laws of AutoZone, Inc.
4.1 Form of Common Stock Certificate. Incorporated by
reference to Exhibit 4.1 to Pre-Effective Amendment No. 2
to the Registration Statement filed on Form S-1 under the
Securities Act of 1933 (No. 33-45649).
4.2 Registration Rights Agreement between AutoZone, Inc. and
J. Dale Dawson and Judith S. Dawson dated May 1, 1998.
Incorporated by reference to the Form 10-Q for the quarter
ended May 9, 1998.
4.3 Senior Indenture, dated as of July 22, 1998, between
AutoZone, Inc. and the First National Bank of Chicago.
Incorporated by reference to Exhibit 4.1 to the Form 8-K
dated July 17, 1998.
*10.1 Director Stock Option Plan. Incorporated by reference to
Exhibit 4.1 to the Form S-8 (No. 333-48981) dated March
31, 1998.
*10.2 1998 Director Compensation Plan. Incorporated by reference
to Exhibit 4.1 to the Form S-8 (No. 333-48979) dated March
31, 1998.
*10.3 Amended and Restated Stock Option Plan, as amended on
February 26, 1991. Incorporated by reference to Exhibit
10.4 to the Form S-1 (No. 33-39197) filed April 1, 1991.
*10.4 Amendment No. 1 dated December 18, 1992, to the Amended
and Restated Stock Option Plan. Incorporated by reference
to Exhibit 10.5 to the Form 10-K for the fiscal year ended
August 28, 1993.
*10.5 Amended and Restated 1996 Stock Option Plan. Incorporated
by reference to Exhibit 10.2 to the Form 10-Q for the
quarter ended November 22, 1997.
*10.6 Employment and Non-Compete Agreement between John C.
Adams, Jr., and AutoZone, Inc., dated June 11, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.7 Employment and Non-Compete Agreement between Timothy D.
Vargo, and AutoZone, Inc., dated June 11, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.8 Employment and Non-Compete Agreement between Robert J.
Hunt, and AutoZone, Inc., dated June 11, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.9 Employment and Non-Compete Agreement between Stephen W.
Valentine, and AutoZone, Inc., dated July 7, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.10 Employment and Non-Compete Agreement between Harry L.
Goldsmith, and AutoZone, Inc., dated June 11, 1997.
Incorporated by reference to the Form 10-K for the fiscal
year ended August 29, 1997.
*10.11 Executive Incentive Compensation Plan. Incorporated by
reference to Exhibit A to the definitive Proxy Statement
dated November 14, 1994.
10.12 Amended and Restated Agreement between J.R. Hyde, III,
and AutoZone, Inc., dated October 23, 1997. Incorporated
by reference to Exhibit 10.1 to the Form 10-Q for the
quarter ended November 22, 1997.
10.13 Credit Agreement dated as of February 23, 1998 among
AutoZone, Inc., the several lenders from time to time
party thereto, and NationsBank, N.A. as Agent and SunTrust
Bank, Nashville, N.A. as Documentation Agent. Incorporated
by reference to Exhibit 10.1 the Form 10-Q for the quarter
ended May 9, 1998.
10.14 Credit Agreement among AutoZone, Inc., as Borrower, the
several lenders from time to time party thereto,
NationsBank, N.A., as Agent, and SunTrust Bank, Nashville,
N.A. as Co-Agent, dated December 20, 1996. Incorporated by
reference to the Form 10-Q for the quarter ended February
15, 1997.
10.15 Amendment No. 1 to Credit Agreement among AutoZone, Inc.,
as Borrower, the several lenders from time to time party
thereto, NationsBank, N.A., as Agent, and SunTrust Bank,
Nashville, N.A. as Co-Agent, dated December 20, 1996.
Incorporated by reference to Exhibit 10.2 to the Form 10-Q
for the quarter ended February 14, 1998.
13.1 Annual Report to Stockholders for the fiscal year ended
August 29, 1998. Incorporated by reference to the Annual
Report filed with the Securities and Exchange Commission
via EDGAR pursuant to Rule 101(b)(1) of Regulation S-T.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP.
__________________
*Management contract or compensatory plan or arrangement.
AMENDED AND RESTATED
BY-LAWS
OF
AUTOZONE, INC.
ARTICLE I.
OFFICES
Section 1. The Corporation may have offices at such places both
within and without the State of Nevada as the Board of Directors may from
time to time determine or the business of the Corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at any
place within or outside the State of Nevada as shall be designated from
time to time by the Board of Directors. In the absence of any such
designation, stockholders' meetings shall be held at the principal
executive office of the Corporation.
Section 2. The annual meeting of stockholders shall be held on
such date and at such time and place as may be fixed by the Board of
Directors and stated in the notice of the meeting, for the purpose of
electing directors and for the transaction of such other business as is
properly brought before the meeting in accordance with these By-Laws.
To be properly brought before the annual meeting, business must
be either (i) specified in the notice of annual meeting (or any supplement
or amendment thereto) given by or at the direction of the Board of
Directors, (ii) otherwise brought before the annual meeting by or at the
direction of the Board of Directors, or (iii) otherwise properly brought
before the annual meeting by a stockholder. In addition to any other
applicable requirements, for business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the Corporation, not less than ninety
(90) days prior to the meeting A stockholder's notice to the Secretary
shall set forth (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class, series and number of
shares of the Corporation which are beneficially owned by the stockholder,
and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in the By-Laws to the contrary, no business shall
be conducted at the annual meeting except in accordance with the procedures
set forth in this Article II, Section 2. The officer of the Corporation
presiding at an annual meeting shall, if the facts warrant, determine and
declare to the annual meeting that business was not properly brought before
the annual meeting in accordance with the provisions of this Article II,
Section 2, and if he should so determine, he shall so declare to the annual
meeting and any such business not properly brought before the meeting shall
not be transacted. Written notice of the annual meeting stating the place,
date and hour of the annual meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten (10) nor more than sixty
(60) days before the date of the meeting.
Section 3. The holders of a majority of the voting power of the
Corporation's stock at any meeting of stockholders, which are present in
person or represented by proxy, shall constitute a quorum for the
transaction of business except as otherwise provided by law, by the
Articles of Incorporation, or by these By-Laws. A quorum, once established,
shall not be broken by the withdrawal of enough votes to leave less than a
quorum and the votes present may continue to transact business until
adjournment. If, however, such quorum shall not be present or represented
at any meeting of the stockholders, a majority of the voting stock
represented in person or by proxy may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally notified. If
the adjournment is for more than thirty days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder of record entitled to
vote thereat.
Section 4. When a quorum is present at any meeting, the holders
of a majority of the voting power of the Corporation's stock present in
person or represented by proxy shall decide any question brought before
such meeting, unless the question is one upon which by express provision of
the statutes, or the Articles of Incorporation, or these By-Laws, a
different vote is required in which case such express provision shall
govern and control the decision of such question.
Section 5. At each meeting of the stockholders, each stockholder
having the right to vote may vote in person or may authorize another person
or persons to act for him by proxy appointed in a reasonable manner as may
be permitted by law, including, without limitation, a signed writing,
telegram, facsimile, and electronic communication. All proxies must be
filed with the Secretary of the Corporation at the beginning of each
meeting in order to be counted in any vote at the meeting. Each stockholder
shall have one vote for each share of stock having voting power, registered
in his name on the books of the Corporation on the record date set by the
Board of Directors as provided in Article V, Section 6 hereof.
Section 6. Special meetings of the stockholders, for any
purpose, or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the President and shall be
called by the President or the Secretary at the request in writing of a
majority of the Board of Directors, or at the request in writing of the
holders of a majority of the voting power of the Corporation's stock. Such
request shall state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting of stockholders shall be limited
to the purposes stated in the notice.
Section 7. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be
given which notice shall state the place, date and hour of the meeting and
the purpose or purposes for which the meeting is called. The written notice
of any meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting. If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the Corporation.
Section 8. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for
a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof,
and may be inspected by any stockholder who is present.
Section 9. Unless otherwise provided in the Articles of
Incorporation, any action required to be taken at any annual or special
meeting of stockholders of the Corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders
of a majority of the voting power of the Corporation's stock. Prompt notice
of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE III
DIRECTORS
Section 1. Subject to any limitations in the laws of the State
of Nevada, the Articles of Incorporation or these By-Laws, the number of
directors may be changed from time to time by resolutions adopted by the
Board of Directors or the stockholders. No reduction of the number of
directors shall have the effect of removing any director prior to the
expiration of his term of office. A director need not be a stockholder of
the Corporation. Nominations of persons for election to the Board of
Directors of the Corporation at the annual meeting may be made at such
meeting by or at the direction of the Board of Directors, by any committee
or persons appointed by the Board of Directors or by any stockholder of the
Corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Article III,
Section 1. Such nominations by any stockholder shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely,
a stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than ninety (90)
days prior to the meeting. Such stockholder's notice to the Secretary shall
set forth (i) as to each person whom the stockholder proposes to nominate
for election or reelection as a director, (a) the name, age, business
address and residence address of the person, (b) the principal occupation
or employment of the person, (c) the class and number of shares of capital
stock of the Corporation which are beneficially owned by the person, and
(d) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors pursuant
to the Rules and Regulations of the Securities and Exchange Commission
under Section 14 of the Securities Exchange Act of 1934, as amended; and
(ii) as to the stockholder giving the notice (a) the name and record
address of the stockholder and (b) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the
stockholder. The Corporation may require any proposed nominee to furnish
such other information as may reasonably be required by the Corporation to
determine the eligibility of such proposed nominee to serve as a director
of the Corporation. No person shall be eligible for election as a director
of the Corporation unless nominated in accordance with the procedures set
forth herein. The officer of the Corporation presiding at an annual meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedure, and if
he should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded. The directors shall be elected
at the annual meeting of the stockholders, except as provided in Section 2
of this Article III, and each director elected shall hold office until his
successor is elected and qualified; provided, however, that unless
otherwise restricted by the Articles of Incorporation or law, any director
or the entire Board of Directors may be removed, either with or without
cause, from the Board of Directors at any meeting of stockholders by the
holders of two-thirds of the voting power of the Corporation's stock.
Section 2. Vacancies on the Board of Directors by reason of
death, resignation, retirement, disqualification, removal from office, or
otherwise, and newly created directorships resulting from any increase in
the authorized number of directors may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole
remaining director. The directors so chosen shall hold office until the
next annual election of directors and until their successors are duly
elected and shall qualify, unless sooner displaced. If there are no
directors in office, then an election of directors may be held in the
manner provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute
less than a majority of the whole Board (as constituted immediately prior
to any such increase), any stockholder or stockholders holding at least ten
percent of the voting power of the Corporation's stock may summarily order
an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 3. The property and business of the Corporation shall be
managed by or under the direction of its Board of Directors. In addition to
the powers and authorities by these By-Laws expressly conferred upon them,
the Board may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Articles of
Incorporation or by these By-Laws directed or required to be exercised or
done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The directors may hold their meetings and have one or
more offices, and keep the books of the Corporation outside of the State of
Nevada.
Section 5. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time be
determined by the Board.
Section 6. Special meetings of the Board of Directors may be
called by the President on twenty-four hours' notice to each director,
either personally, by telephone, by facsimile, by mail or by telegram;
special meetings shall be called by the President or the Secretary in like
manner and on like notice on the written request of two directors unless
the Board consists of only one director; in which case special meetings
shall be called by the President or Secretary in like manner or on like
notice on the written request of the sole director.
Section 7. At all meetings of the Board of Directors a majority
of the authorized number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the vote of a
majority of the directors present at any meeting at which there is a
quorum, shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute, by the Articles of
Incorporation or by these By-Laws. If a quorum shall not be present at any
meeting of the Board of Directors the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present. If only one director is
authorized, such sole director shall constitute a quorum.
Section 8. Unless otherwise restricted by the Articles of
Incorporation or these By-Laws, any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee,
as the case may be, consent thereto in writing, and the writing or writings
are filed with the minutes of proceedings of the Board or committee.
Section 9. Unless otherwise restricted by the Articles of
Incorporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a
meeting of the Board of Directors, or any committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in
a meeting shall constitute presence in person at such meeting.
COMMITTEES OF DIRECTORS
Section 10. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate one or more committees, each such
committee to consist of one or more of the directors of the Corporation.
The Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at
the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board of
Directors, shall have and may exercise all the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers
which may require it; but no such committee shall have the power in
reference to amending the Articles of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors, fix the designations and any of the preferences or rights of
such shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any
other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize
the increase or decrease of the shares of any series), adopting an
agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, or amending the By-Laws of
the Corporation; and, unless the resolution, By-Laws, or the Articles of
Incorporation expressly so provide, no such committee shall have the power
or authority to declare a dividend to authorize the issuance of stock, or
to adopt Articles of Merger.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the Articles of
Incorporation or these By-Laws, the Board of Directors shall have the
authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee
meetings.
INDEMNIFICATION
Section 13. (a) The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the right of the
Corporation, by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, does not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise
against expenses, including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation. Indemnification shall not be made for any claim, issue or
matter as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the Corporation or for amounts paid in settlement to the Corporation unless
and only to the extent that the court in which such action or suit was
brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
(c) To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in paragraphs (a) and (b), or
in defense of any claim, issue or matter therein, he must be indemnified by
the Corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
(d) Any indemnification under paragraphs (a) and (b), unless
ordered by a court shall be made by the Corporation only as authorized in
the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances. The
determination shall be made (1) by the holders of a majority of the voting
power of the corporation's stock, (2) by the Board of Directors by majority
vote of a quorum consisting of directors who were not parties to the act,
suit or proceeding, (3) if a majority vote of a quorum consisting of
directors who are not parties to the act, suit or proceeding so order, by
independent legal counsel in a written opinion, or (4) if a quorum
consisting of directors who were not parties to the act, suit or proceeding
cannot be obtained, by independent legal counsel in a written opinion.
(e) Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in this Section
13. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the Board of Directors deems
appropriate.
(f) The indemnification and advancement of expenses authorized in
or ordered by a court pursuant to the other paragraphs of this Section 13,
(i) does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any By-
Law, agreement, vote of stockholders or disinterested directors or
otherwise, for either an action in his official capacity or an action in
another capacity while holding his office except that indemnification,
unless ordered by a court pursuant to paragraph (b) or for the advancement
of expenses made pursuant to paragraph (e), may not be made to or on behalf
of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action; and (ii)
continues for a person who has ceased to be a director, officer, employee
or agent and inures to the benefit of the heirs, executors and
administrators of such a person. If a claim for indemnification or payment
of expenses under this Section 13 is not paid in full within ninety (90)
days after a written claim therefor has been received by the Corporation,
the claimant may file suit to recover the unpaid amount of such claim and,
if successful in whole or in part, shall be entitled to be paid the expense
of prosecuting such claim. In any such action the Corporation shall have
the burden of proving that the claimant was not entitled to the requested
indemnification or payment of expenses under applicable law.
(g) The Board of Directors may authorize, by a vote of a majority
of a quorum of the Board of Directors, the Corporation to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability
under the provisions of this Section 13.
(h) The Board of Directors may authorize the Corporation to enter
into a contract with any person who is or was a director, officer, employee
or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
partnership, joint venture, trust or other enterprise providing for
indemnification rights equivalent to or, if the Board of Directors so
determines, greater than those provided for in this Section 13.
(i) For the purposes of this Section 13, references to "the
Corporation" shall include, in addition to the resulting Corporation, any
constituent Corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent Corporation, or is
or was serving at the request of such constituent Corporation as a
director, officer, employee or agent of another Corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position
under the provisions of this Section with respect to the resulting or
surviving Corporation as he would have with respect to such constituent
Corporation if its separate existence had continued.
(j) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include service as a director, officer, employee or
agent of the Corporation which imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in
good faith and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this section.
ARTICLE IV.
OFFICERS
Section 1. The officers of this Corporation shall be chosen by
the Board of Directors and shall include a President, a Secretary and a
Treasurer. The Corporation may also have at the discretion of the Board of
Directors such other officers as are desired, including a Chairman of the
Board, one or more Vice Presidents, one or more Assistant Secretaries and
Assistant Treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3 hereof. In the event there are
two or more Vice Presidents, then one or more may be designated as
Executive Vice President, Senior Vice President, or other similar or
dissimilar title. At the time of the election of officers, the directors
may by resolution determine the order of their rank. Any number of offices
may be held by the same person, unless the Articles of Incorporation or
these By-Laws otherwise provide.
Section 2. The Board of Directors, at its first meeting after
each annual meeting of stockholders, shall choose the officers of the
Corporation.
Section 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices
for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 4. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
Section 5. The officers of the Corporation shall hold office
until their successors are chosen and qualify in their stead. Any officer
elected or appointed by the Board of Directors may be removed at any time
by the affirmative vote of a majority of the Board of Directors. If the
office of any officer or officers becomes vacant for any reason, the
vacancy shall be filled by the Board of Directors.
CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if such an officer be
elected, shall, if present, preside at all meetings of the Board of
Directors and exercise and perform such other powers and duties as may be
from time to time assigned to him by the Board of Directors or prescribed
by these By-Laws. The Chairman of the Board shall in addition be the Chief
Executive Officer of the Corporation and shall have the powers and duties
prescribed in Section 7 of this Article IV, if no such officer is elected.
CHIEF EXECUTIVE OFFICER
Section 7. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman of the Board, if there be
such an officer, the Chief Executive Officer shall, subject to the control
of the Board of Directors, have general supervision, direction and control
of the business and officers of the Corporation. He shall preside at all
meetings of the Stockholders and, if there is no Chairman of the Board, at
all meetings of the Board of Directors. He shall be an ex-officio member of
all committees and shall have the general powers and duties of management
usually vested in the office of Chief Executive Officer of corporations,
and shall have such other powers and duties as may be prescribed by the
Board of Directors or these By-Laws.
PRESIDENT
Section 8. In the absence or disability of the Chief Executive
Officer, the President shall perform all duties of the Chief Executive
Officer, and when so acting shall have all the powers of and be subject to
all the restrictions upon the Chief Executive Officer. He shall be an ex-
officio member of all committees and shall have the general powers and
duties of management usually vested in the office of President of
corporations, and shall have such other powers and duties as may be
prescribed by the Board of Directors or these By-Laws.
VICE PRESIDENTS
Section 9. In the absence or disability of the President, the
Vice Presidents in order of their rank as fixed by the Board of Directors,
or if not ranked, the Vice President designated by the Board of Directors,
shall perform all the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall have such other duties as from time to
time may be prescribed for them, respectively, by the Board of Directors.
SECRETARY AND ASSISTANT SECRETARY
Section 10. The Secretary shall attend all sessions of the Board
of Directors and all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose; and
shall perform like duties for the standing committees when required by the
Board of Directors. The Secretary shall give, or cause to be given, notice
of all meetings of the stockholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of
Directors or these By-Laws. The Secretary shall keep in safe custody the
seal of the Corporation, and affix the same to any instrument requiring it,
and when so affixed it shall be attested by his signature or by the
signature of an Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation
and to attest the affixing by his signature.
Section 11. The Assistant Secretary, or if there be more than
one, the Assistant Secretaries in the order determined by the Board of
Directors, or if there be no such determination, the Assistant Secretary
designated by the Board of Directors, shall, in the absence or disability
of the Secretary perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
TREASURER AND ASSISTANT TREASURER
Section 12. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys, and other valuable effects in the name and to the
credit of the Corporation, in such depositories as may be designated by the
Board of Directors. He shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, he shall give the
Corporation a bond, in such sum and with such surety or sureties as shall
be satisfactory to the Board of Directors, for the faithful performance of
the duties of his office and for the restoration to the Corporation, in
case of his death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Corporation.
Section 13. The Assistant Treasurer, or if there shall be more
than one, the Assistant Treasurers in the order determined by the Board of
Directors, or if there be no such determination, the Assistant Treasurer
designated by the Board of Directors, shall, in the absence or disability
of the Treasurer, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
ARTICLE V.
CERTIFICATES OF STOCK
Section 1. Every holder of stock of the Corporation shall be
entitled to have a certificate signed by, or in the name of the Corporation
by, the Chairman or Vice Chairman of the Board of Directors, or the
President or a Vice President, and by the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer of the Corporation,
certifying the number of shares represented by the certificate owned by
such stockholder in the Corporation.
Section 2 Any or all of the signatures on the certificate may be
a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent, or registrar before
such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the
date of issue.
Section 3. If the Corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the voting
powers, designations, preferences, limitations, restrictions and relative
rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which
the Corporation shall issue to represent such class or series of stock,
provided that, except as otherwise provided in section 78.195 of the
Revised Nevada Statutes, in lieu of the foregoing requirements, there may
be set forth on the face or back of the certificate which the Corporation
shall issue a statement setting forth the office or agency of the
Corporation from which the stockholders may obtain a copy of a statement
setting forth in full or summarizing the voting powers, designations,
preferences, limitations, restrictions and relative rights of each class of
stock or series thereof that the Corporation will furnish without charge to
each stockholder who so requests.
LOST, STOLEN OR DESTROYED CERTIFICATES
Section 4. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the
same in such manner as it shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may
be made against the Corporation with respect to the certificate alleged to
have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 5. Upon surrender to the Corporation, or the transfer
agent of the Corporation, of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
FIXING RECORD DATE
Section 6. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of the
stockholders, or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board
of Directors may fix a record date which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty
days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 7. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim or
interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by
the laws of the State of Nevada.
ARTICLE VI.
GENERAL PROVISIONS
DISTRIBUTIONS
Section 1. Distributions upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law.
Section 2. Before payment of any distribution there may be set
aside out of any funds of the Corporation available for distributions such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies, or for
equalizing distributions, or for repairing or maintaining any property of
the Corporation, or for such other purpose as the directors shall think
conducive to the interests of the Corporation, and the directors may
abolish any such reserve.
CHECKS
Section 3. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers, or such other
persons, as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal, Nevada". Said seal
may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
NOTICES
Section 6. Whenever, under the provisions of the statutes or of
the Articles of Incorporation or of these By-Laws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, addressed to such
director or stockholder, at the stockholder's address as it appears on the
records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in
the United States mail. Notice to any director may be by any reasonable
means, including, without limitation, mail, personal delivery, facsimile,
or electronic communication. All notices shall be deemed given when sent.
Section 7. Whenever any notice is required to be given under the
provisions of the statutes or of the Articles of Incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
ARTICLE VII.
AMENDMENTS
Section 1. Except as otherwise restricted in the Articles of
Incorporation or these By-Laws:
(a) Any provision of these By-Laws may be altered, amended or
repealed at the annual or any regular meeting of the Board of Directors
without prior notice, or at any special meeting of the Board of Directors
if notice of such alteration or repeal be contained in the notice of such
special meeting.
(b) These By-Laws may also be altered, amended or repealed at a
duly convened meeting of the stockholders by the affirmative vote of the
holders of a majority of the voting power of the Corporation's stock. The
stockholders may provide by resolution that any
By-law provision repealed, amended, adopted or altered by them may not be
repealed, amended, adopted or altered by the Board of Directors.
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
Name under
State or Country which subsidiary
of Incorporation is doing business
Name or Organization other than its own
- ------------- ---------------- -------------------
ADAP, Inc. New Jersey AutoZone
ALLDATA Corporation Delaware
AutoZone Stores, Inc. Nevada
AutoZone Development Corporation Nevada
AutoZone Management, L.P. Delaware
AutoZone de Mexico, S. de R.L. de C.V. Mexico
AutoZone Texas, L.P. Delaware
Chief Auto Parts Inc. Delaware AutoZone
TruckZone, Inc. Nevada TruckPro
In addition, three subsidiaries operating in the United States and five
subsidiaries operating outside of the United States have been omitted as
they would not, considered in the aggregate as a single subsidiary,
constitute a significant subsidiary as defined by Rule 1-02(w) of
Regulation S-X.
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of AutoZone, Inc. of our report dated September 30, 1998, included
in the 1998 Annual Report to Stockholders of AutoZone, Inc.
Our audits also included the financial statement schedule of AutoZone,
Inc. listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedule referred
to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-41308) pertaining to the AutoZone, Inc.
Employee Stock Purchase Plan, the Registration Statement (Form S-8 and
Form S-3 No. 33-41618) pertaining to the Amended and Restated Stock
Option Plan of AutoZone, Inc., the Registration Statement (Form S-8 No.
333-19561) pertaining to the AutoZone, Inc. 1996 Stock Option Plan, the
Registration Statement (Form S-8 No. 333-48979) pertaining to the
AutoZone, Inc. Director Compensation Plan, the Registration Statement
(Form S-8 No. 333-48981) pertaining to the AutoZone, Inc. 1998 Director
Stock Option Plan and the Registration Statement (Form S-3 No. 333-
58565), of our report dated September 30, 1998, with respect to the
consolidated financial statements and schedule of AutoZone, Inc. included
or incorporated by reference in this Annual Report (Form 10-K) for the
year ended August 29, 1998.
/s/ ERNST & YOUNG LLP
Memphis, Tennessee
November 23, 1998
